Russian oil company says production is up

Russian oil producers are expected to play a major role in managed production declines next year.

By Daniel J. Graeber

Russian oil producer Gazprom Neft says its production for 2016
should be about 8 percent higher than last year. Photo courtesy Gazprom
Neft

As supply-side issues weigh on oil markets, Russian oil producer Gazprom Neft said its production for the year was up more than 7 percent from 2015.

The company, the fourth largest oil producer in Russia, said in a summary statement
its full-year production was expected to reach 650 million barrels of
oil equivalent. At a time when Russia is expected to contribute to the
bulk of a planned production cut next year, the company's output would
be 7.7 percent higher than 2015 if estimates are accurate.

Members of the Organization of Petroleum
Exporting Countries agreed to cut production by about what it expects in
demand growth next year. Most of that cut depends on non-member state
cooperation and relies in large part on Russia to be effective at easing
the supply-side strains that dragged oil prices to below $30 per barrel
in early 2016.

Economists with French financial services company Societe Generale said Russia has a poor track record
when it comes to managed declines. This year, Gazprom Neft commissioned
two new oil fields and boasted that its Prirazlomnoye field, situated
in the Russian Arctic, passed 22 million barrels in cumulative
production.

Gazprom Neft is a division of Russian energy company Gazprom. Chairman of the Board of Directors Alexei Miller said a two-year plan for the oil producer called for peak investments in production

"I have no doubt that over the next year
Gazprom Neft will retain its market-leading position, both in terms of
its performance and rapid business growth," he said in a statement.

Russia's stance on a production plan set to
enter into force next week has been fluid, with the Kremlin advocating
for a freeze rather than a cut in production.

Russia set up an advisory panel that would
monitor compliance with the OPEC agreement. Russia said it would cut
about 300,000 barrels of oil per day from output, with is more than half
of the combined agreements from non-OPEC members.

Russian oil company says production is up
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